HHS Push on Paying for Quality Has Its Critics

Agency is moving too fast, some experts say.

WASHINGTON -- The announcement by the Obama Administration that it will start tying most of its Medicare reimbursement to quality or value rather than volume has garnered a lot of positive responses -- but not everyone is jumping on the bandwagon.

"I think the administration is right to want to move away from fee-for-service [reimbursement], but if you're going to squeeze doctors and other providers out of fee-for-service, they've got to have someplace else to go," John O'Shea, MD, visiting fellow in the Center for Health Policy Studies at the Heritage Foundation, a right-leaning think tank here, said in a phone interview. "The evidence so far with these alternative payment models doesn't seem to support the enthusiasm [for them]."

The Department of Health and Human Services (HHS) announced Monday that by 2016, it is aiming to have 85% of provider payments under Medicare's fee-for-service system based on the quality or value of care, instead of on volume.

In addition, by the end of 2016, the agency hopes to be making 30% of its payments through alternative payment models like accountable care organizations (ACOs) -- affiliations of doctors, hospitals, and other providers that jointly care for Medicare patients -- upping that percentage to 50% by the end of 2018.

"I don't know where these [alternative payment] models are going to come from," O'Shea continued, noting that in a previous job on Capitol Hill, "I did a fair amount of work developing alternative payment models for specialty care and these are not easy to design and implement."

Early results for alternative payment models aren't very positive, O'Shea said, citing as an example the early results from the Centers for Medicare and Medicaid Services' own ACO programs.

"The Pioneer ACOs, which are supposed to be more mature and more ready to participate ... of 29 initial organizations, only nine realized any significant savings," he said. "That's not to say that with time, these things can't be developed correctly, but the evidence so far should present caution to the administration in terms of pushing providers too fast out of fee-for-service."

Joe Antos, scholar in healthcare and retirement policy at the American Enterprise Institute, a right-leaning think tank here, said Monday's announcement was really more of a public relations move.

"The idea of setting deadlines and claiming that a high percentage of Medicare bills would be paid on some kind of performance-based payment system conceals much more than it reveals -- other than [revealing] that this is an administration that is perfectly happy to ignore technical difficulties and claim victory when victory is very far away," he told MedPage Today in a phone interview.

Antos noted that of the 220 or so ACOs participating in Medicare's pilot programs overall, "half spent spent more money than assumed they were going to spend. The fact that ACOs are a 50/50 shot means that there are fundamental defects in the philosophy behind the whole program and certainly big problems with the way the Centers for Medicare and Medicaid Services has set up the rules."

Another question, Antos continued, is what percentage of providers' pay will actually be based on performance. For example, with a significant procedure such as open-heart surgery, "how much of the Medicare payment ... would be subject to either bonuses or penalties related to performance? Would it be 15%? 20%? They haven't said ... More likely it's going to be on the order of 1%, 2%, or 3% -- too small to bother with."

Jane Orient, MD, executive director of the Association of American Physicians and Surgeons, a physician group in Tucson, Ariz., said part of the problem is that HHS doesn't really know how to measure outcomes in a meaningful way.

"How do you define outcomes, and how do you cope with the fact that only about 10% of the outcome has anything to do with what the doctor does, and the rest has to do with how sick the patient is and how well the patient follows advice?" she said in a phone interview. "And how do they define [a positive] outcome -- saving someone's life, or restoring them to a vital state of health, which in many cases is not going to be possible?"

"What's going to happen is that [physicians] will avoid sick patients or complicated patients because they won't want to work without getting paid."

The only proper fee to charge Medicare patients "is what the patient and physician agree on," Orient continued. "Medicare's price controls are antiquated, arbitrary, and totally perverse. Patients need to figure out a fee, and Medicare would decide how much of that it's going to pay."

Many members of Orient's organization have opted out of Medicare participation, and "a lot of them are finding it's wonderful practicing medicine the way they did in medical school," she said. "They can provide services for free without worrying about being accused of fraud, and they can charge more than the Medicare fee if it is a difficult patient and the patient is willing and able to pay for it."

Doug Hastings, a healthcare attorney at Epstein Becker Green, a law firm here, said he saw yesterday's announcement more as an aspirational statement.

"Clearly, it can be daunting to an individual provider ... or an ACO to actually try to figure out how to be successful in a changing reimbursement environment ... [especially] if you're still getting paid on a fee-for-service basis for a lot of stuff," he told MedPage Today. "But should a thoughtful, forward-looking provider be so daunted as to say, 'I'm going to back off' or 'I'm not going in that direction'? I would say 'no'."

"I would say the goals are aspirational, but not unattainable. Only time will tell," he added.

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